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Context
Cities around the world are realizing that energy consumed by buildings and homes is the leading cause of global-warming emissions. This includes electricity and fossil fuel used to light, heat, and power our homes, apartments, office buildings, and factories. In fact, New York City estimates that energy usage causes roughly 80 percent of its globalwarming emissions and more than 40 percent of locally generated air pollution. By 2015, New York City estimates it will be pumping an additional 4.6 million tons of CO2 into the atmosphere each year.1 The cause is a growing demand for energy, combined with aging electricity infrastructure. New York Citys electricity demand is forecast to grow 44 percent by 2030. Many plants that generate electric power are more than 30 years old (with outdated technologies), use 30 to 60 percent more fuel, and produce several times the air pollution of newer plants to generate the same amount of electricity.
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But energy poses additional challenges for city leaders. Our demand for electricity continues to grow, increasing consumer costs. New York City estimates that by 2015, the citys annual electricity and heating bill will grow by $3 billiontranslating into annual energy bills that are $300 to $400 higher per household. By 2030, New York City forecasts electricity costs will rise 60 percent above todays. Clearly, city leaders working to reduce their impact on climate change need to focus carefully on how energy is generated, distributed, and consumed throughout their city. What can be done? Leading cities are creating dedicated ministries and departments to develop integrated strategies to meet our growing demand for energy while mitigating its impact on climate change. There is no easy solution, and cities must focus both on reducing energy consumption of residents and industry while accelerating greener energy-generation plants. This paper presents an overview of emerging solutions for city leaders to reduce electricity consumption, produce greener energy with lower carbon emissions, and improve the reliability of the electric grid.
2. IPCC, 2007. 3. Stern Review on the Economics of Climate Change, 2006. 4. Long-Term Reliability Assessment 20072016, North American Electric Reliability Corporation (NERC), October 2007.
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Figure 1. Projected Electricity Capacity versus Demand in the United States 1,100 1,050 Thousands of Megawatts 1,000 950 900 850 800 750 700 650 600 550 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Year
Source: NERC, 2008; Cisco IBSG, 2008
Projected Potential Capacity Projected Available Capacity High Demand Projection Low Demand Projection Historic Demand
Given this information, governments and regulators, utility companies, and technology firms are rethinking how the electricity grid should look. Already, utility companies and governments around the world are launching efforts to: Increase distributed solar and wind power generation to increase the electrical supply without additional greenhouse gas emissions Use plug-in hybrid electric vehicles (PHEVs) to generate and consume electric power intelligently Sequester (scrub and store) the carbon from coal plant emissions Use demand management to improve energy efficiency and reduce overall electricity consumption Monitor and control the energy grid in near-real time to improve reliability and utilization, reduce blackouts, and postpone costly new upgrades For all of these effortssolar and wind plants, PHEVs, active home-energy management, and grid monitoringto work together in one integrated system, a new level of intelligence and communication will be required. For example: Rooftop solar panels need to notify backup power generators within seconds that approaching clouds will reduce output. The grid needs to notify PHEVs about the best time to recharge their batteries. Utility companies need to communicate with and control appliances such as refrigerators and air conditioners during periods of peak electricity demand.
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Factory operators must know the cost of electric power every few minutes to manage their energy use economically. Homeowners need to become smart buyers and consumers of electricity by knowing when to adjust thermostats to optimize energy costs. Unfortunately, these activities cannot be achieved with the current energy grid. Todays electric infrastructure simply cannot coordinate and control all the systems that will be attached to it. A new, more intelligent electric system or Smart Grid is required that combines information technology (IT) with renewable energy to significantly improve how electricity is generated, delivered, and consumed (see Figure 2). A Smart Grid provides utility companies with near-real-time information to manage the entire electrical grid as an integrated systemactively sensing and responding to changes in power demand, supply, costs, and emissionsfrom rooftop solar panels on homes, to remote, unmanned wind farms, to energy-intensive factories. A Smart Grid is a major advance from today, where utility companies have only basic information about how the grid is operating, with much of that information arriving too late to prevent a major power failure or blackout.
Figure 2. Traditional Roles Are Reversed with a Smart GridConsumers Become Producers, and Information and Electricity Flow in Both Directions
Energy Storage
Coal Sequestration
Emissions Monitoring
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5. GridWise Demonstration Project Fast Facts, Pacific Northwest National Laboratory, December 2007.
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This process, called load shifting or load shedding, can have the joint benefit of reducing costs for typical consumers while lowering demand peaks for utility companies. Smart buildings with smart appliancesFor decades, architects have designed passive, energy-efficient systems such as multi-pane windows, better insulation, and appliances that use less energy and are more friendly to the environment. Recent technology innovations now allow active monitoring and reduction of the energy consumed by appliances. Building control systems that manage various appliances heating, ventilation, air conditioning (HVAC), and lightingalso are converging onto a common IT infrastructure that allows these devices to communicate with each other to be more efficient and reduce waste. A manager of more than 100 government buildings, for example, was able to reduce energy consumption nearly 20 percent and save tens of millions of dollars annually simply by ensuring that his building systems were operating properly.6 This meant heaters and air conditioners were not running simultaneously, steam traps were not leaking, and ventilation fans were operational. Energy dashboards and controllersOnline energy dashboards and controllers, already being developed, will provide real-time visibility into individual energy consumption and generation while automatically turning major appliances on and off, and adjusting thermostats to reduce energy use and lower CO2 emissions. A recent university study found that simple dashboards can encourage occupants to reduce energy use in buildings by up to 30 percent.7 Similarly, homeowners will have passive displays, such as the Ambient Orb, a countertop device that glows red when electricity costs are high and green when costs are low, to make the cost of energy more transparent for consumers. Green ITElectricity requirements for IT equipment, such as computers, printers, servers, and networking equipment, vary widely across building types. For example, restaurants, warehouses, and retail stores have much lower power consumption for IT equipment than office buildings and data centers. For office buildings, IT typically accounts for more than 20 percent of the energy used, and up to 70 percent in some offices.8 As HVAC and lighting systems become more efficient and the volume of IT gear in smart buildings grows, the portion of building energy use attributable to IT will continue to increase. Smart-building solutions that improve the energy efficiency of IT equipment include network-based power management, network printers, server virtualization, the procurement of energy-efficient equipment, and telecommuting.
6. State of Missouri, Dave Mosby, Director of the Division of Facilities Management and Design and Construction (DFMDC), 2007. 7. Oberlin College, 2005, http://www.oberlin.edu/dormenergy/news.htm 8. Cisco IBSG, 2008.
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For example, business buildings and government facilities consume electricity primarily during normal working hours, while homes use it mostly during morning and evening hours. By aggregating the total energy consumption, energy co-ops can smooth some of the variability in total energy demand. Backup and alternative power sources in buildings could also provide power to homes during off-business hours, while homes could provide power to businesses during working hours. While the concept is yet to be fully proven, energy co-ops may offer a reasonable alternative to utility-only power, especially if local regulations do not yet require utility companies to buy back surplus power generated locally.
10. Department of Energy Putting Power in the Hands of Consumers through Technology, Pacific Northwest National Laboratory, January 2008, http://www.pnl.gov/topstory.asp?id=285
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If widely deployed, this approach could reduce peak loads on utility grids up to 15 percent annually, which equals more than 100 gigawatts, or the need to build 100 large coal-fired power plants over the next 20 years in the United States alone. This could save up to $200 billion in capital expenditures on new plant and grid investments, and take the equivalent of 30 million autos off the road.11 Similarly, governments are trying to revitalize economic growth by attracting industries that will produce and build the Smart Grid. According to former U.S. Vice President Al Gore, Just as a robust information economy was triggered by the introduction of the Internet, a dynamic, new, renewable energy economy can be stimulated by the development of an electranet or Smart Grid.12
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First Steps
Practically speaking, most of the technologies required to create a Smart Grid are available today. In fact, forward-looking utility companies are already using these technologies to deliver solutions to their customers. For example, many utility companies are offering demand-response programs for their corporate customers, and increasingly for residential customers. In addition, some utility companies are implementing large numbers of smart electric meters to offer variable pricing to consumers and to reduce manual meter-reading costs. While these first steps are encouraging, more needs to be done.
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Technology Companies
Partner to improve systems integration Increase risk-taking to speed development Create new markets to ensure participation and success
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tariffs. While the jury is still out, Californias per-capita energy use has remained relatively flat over the last 30 years. By comparison, per-capita energy use in the rest of the country has surged by 50 percent.17 2) Promote better collaboration and sharing of Smart Grid pilot project results among countries and states. In particular, a multinational research oversight organization that carefully measures and communicates costs, benefits, and risks of all Smart Grid pilot projects to utility companies and regulators could accelerate Smart Grid adoption by providing quantitative results about which solutions are most effective. 3) Direct more R&D funding and incentives to renewable energy-generation and carbon-sequestration initiatives. Redirecting limited government funding away from other programs is never easy. A recent Stern Review18 report found, however, that postponing investments to develop greenhouse-gas-reducing technologies is a bad economic decision. Stern estimates that each year-long delay in developing these technologies will result in the need to spend several times that amount in the future. 4) Provide clear information and incentive programs to consumers to encourage installation of renewable energy generation in their homes. Programs could include marketing campaigns to build awareness and generate excitement, calculators to show return on investment (ROI), and economic rebates and low-cost financing to promote purchases of energy-generation equipment. 5) Encourage agreement on and adoption of critical technology standards. The building industry, for example, has been battling over control-system protocols for more than 10 years. This has significantly delayed the introduction of integrated, energy-efficient building solutions. Todays electrical grid has hundreds of different proprietary data protocols that do not easily communicate with each other. 6) Consider variable, time-based electricity pricing as an alternative to flat-rate pricing. This provides a more natural supply-and-demand market, where consumers can choose to use less energy when the price is high, such as during hot summer afternoons. Similarly, variable pricing would allow consumers to see the greenhouse gas emissions resulting from their own electricity use, further encouraging conservation. 7) Consider policies that set targets for the percentage of electricity coming from renewable energy-generation sources. For example, the 2007 U.S. Energy Act initially specified that 15 percent of all U.S. electricity must come from renewable energy by 2020, of which 4 percent could be achieved by energy-efficiency solutions. This requirement was removed from the final legislation. If passed, these types of policies can help accelerate investments in renewable and efficient energy solutions. The cost to implement these requirements, however, is yet to be determined.
17. Californias Decoupling Policy, California Public Utilities Commission, 2008, http://www.cpuc.ca.gov/cleanenergy/design/docs/Deccouplinglowres.pdf 18. Stern Review on the Economics of Climate Change, 2006.
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3) Create new markets. Large, successful, and established technology companies often pursue a fast follower strategy, waiting for markets to develop before they participate. This approach is popular because it reduces risks and increases the probability of success. The Smart Grid, however, may evolve in a way that negates the benefits of using a fast-follower strategy. he core technology and communications standards required to develop the Smart T Grid are currently being developed. Once these standards are established, they will be built into the power plants, substations, buildings, and power lines that make up the electrical infrastructure. These assets have a useful life of more than 30 yearsmuch longer than the product lifecycles to which technology companies are accustomed making it difficult to enter the utility marketplace once it is established.
Conclusion
Energy is a critical concern to city leaders. The electricity and fuel used to power our homes and buildings are the leading causes of greenhouse gas emissions by cities. Rising demand for energy may significantly increase consumer costs. Aging grid infrastructure raises the risk of power losses and resulting economic shortfalls. Rising fuel costs, underinvestment in an aging infrastructure, and climate change are all converging to create a turbulent period for the electrical power-generation industry. To make matters worse, demand for electricity is forecast to exceed known committed generation capacity in many areas across the United States.20 And, as utility companies prepare to meet growing demand, greenhouse gas emissions from electricity generation may soon surpass those from all other energy sources.21 Fortunately, the creation of a Smart Grid will help solve these challenges. A Smart Grid can reduce the amount of electricity consumed by homes and buildings, and accelerate the adoption of distributed, renewable energy sourcesall while improving the reliability, security, and useful life of electrical infrastructure. Despite its promise and the availability of most of the core technologies needed to develop the Smart Grid, implementation has been slow. To accelerate development, city, state, and federal governments, electric utility companies, public electricity regulators, and IT companies must all come together and work toward a common goal. The suggestions in this paper will help the Smart Grid become a reality that will ensure we have enough power to meet demand, while at the same time reducing greenhouse gases that cause global warming.
20. Long-Term Reliability Assessment 20072016, North American Electric Reliability Corporation (NERC), October 2007. 21. Stern Review on the Economics of Climate Change, 2006.
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